Under Rule 10b-5 of the Securities Act of 1934, _____

question 19

Multiple Choice

Under Rule 10b-5 of the Securities Act of 1934, _____.

• A) the plaintiff must prove that the accountant acted with scienter
• B) the intent to deceive is not an element of the offense
• C) an accountant will never be liable to a purchaser for a misstatement of material fact in the registration statement
• D) an accountant must prove he exercised due diligence to escape liability

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Definitions:

Stock Dividend

Additional shares distributed to shareholders, proportional to their existing holdings, instead of a cash payout.

Retained Earnings

The portion of net income that is kept by the company instead of being paid out to its shareholders as dividends, contributing to the business's capital reserve for future ventures or debt payments.

Retained Earnings Appropriated

Portions of retained earnings that are set aside or reserved by a company's management for specific purposes.

Fire Loss

Financial damage or asset destruction resulting from a fire, often requiring assessment for insurance and recovery purposes.